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The Effect of Capital Structure on Firm Value: A Study of Companies Listed on the Vietnamese Stock Market

International journal of financial studies, 2023-09, Vol.11 (3), p.100 [Peer Reviewed Journal]

COPYRIGHT 2023 MDPI AG ;2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 2227-7072 ;EISSN: 2227-7072 ;DOI: 10.3390/ijfs11030100

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  • Title:
    The Effect of Capital Structure on Firm Value: A Study of Companies Listed on the Vietnamese Stock Market
  • Author: Bui, Thi Ngoc ; Nguyen, Xuan Hung ; Pham, Kieu Trang
  • Subjects: Bankruptcy ; Book value ; Capital structure ; Corporate profits ; effect ; Efficiency ; Equity ; Financial leverage ; Financial statements ; firm value ; Influence ; Literature reviews ; Long term debt ; Modigliani, Franco ; Profitability ; Rate of return ; Return on assets ; ROA ; ROE ; Securities markets ; Short term debt ; Stock markets ; Stockholders ; Stocks ; Taxes ; Tobin, James ; Tobin’s Q
  • Is Part Of: International journal of financial studies, 2023-09, Vol.11 (3), p.100
  • Description: This research investigates the relationship between capital structure and firm value for companies listed on the Vietnamese stock market. The study utilizes data from audited financial statements of 769 companies spanning from 2012 to 2022, amounting to 8459 observations. Employing various estimation methods, such as ordinary least squares (OLS), fixed effects model (FEM), random effects model (REM), and generalized least squares (GLS), the impact of capital structure on key financial indicators, namely, return on assets (ROA), return on equity (ROE), and Tobin’s Q, is assessed. The findings indicate that the debt ratio exhibits a positive influence on ROA, ROE, and Tobin’s Q, with Tobin’s Q displaying the most pronounced impact (0.450) and ROA showing the weakest impact (0.011). However, the long-term debt ratio does not significantly affect firm value. Interestingly, both short-term and long-term debt ratios have negative effects on ROA, ROE, and Tobin’s Q, with the most substantial impact on Tobin’s Q reduction (0.562). Based on these research outcomes, the authors offer valuable recommendations to companies, investors, business leaders, and policymakers to make informed decisions in selecting an optimal and sensible capital structure.
  • Publisher: Basel: MDPI AG
  • Language: English
  • Identifier: ISSN: 2227-7072
    EISSN: 2227-7072
    DOI: 10.3390/ijfs11030100
  • Source: Directory of Open Access Journals at publisher websites
    Coronavirus Research Database
    ROAD: Directory of Open Access Scholarly Resources
    ProQuest Central
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